Build Or Buy?
October 31, 2024
The other FHA construction loan option, the one-time close mortgage, comes in here. This option is for those who want to approve floor plans, have a say in the types of materials used to build the home and choose its features.
Both loan types require the same low down payment of 3.5% and, depending on your downpayment, loan term, and other variables, require mortgage insurance for either 11 years or the lifetime of the mortgage.
Is A One-Time Close Construction Loan Right For You?
An FHA construction loan, often called a "one-time close" loan, combines construction financing and a permanent mortgage into a single transaction, approval, and loan closing day.
The borrower must choose contractors, approve floor plans, and work with the lender and builders to complete the project.
You should have plans for a temporary living space during the construction phase if needed. In typical cases, you won’t be able to live in your new home until the work is fully completed.
This loan suits anyone looking to build a custom home tailored to their needs and preferences. However, to qualify, you may need more cash reserves, higher FICO scores, and the ability to save up your own downpayment.
Is An FHA Purchase Loan Right For You?
An FHA purchase loan is a mortgage insured by the Federal Housing Administration (FHA). It is designed to help applicants with lower FICO scores and/or those who need a smaller down payment find affordable homes.
Creditwise, many feel FHA loans are more lenient compared to conventional loans. FHA loans allow the maximum financing for applicants with FICO scores of 580 or above, though your lender may have additional standards to meet.
Who is right for an FHA purchase loan? With its escape clause guarantee that you can’t be forced to buy a home that appraises lower than the asking price, those who need an affordable home who need a house, condo, mobile home, or even a fixer-upper should look into an FHA purchase loan.
If you need downpayment assistance, an FHA purchase loan may be the best option.
FHA Loan Articles
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